Reimagining Industrial Manufacturing Operations Insights from PwC’s 2015 Global Operations Survey

www.pwc.com/reimagineops
Reimagining
Industrial Manufacturing
Operations
Insights from PwC’s 2015 Global Operations Survey
Industrial manufacturing companies are adapting to an increasingly volatile and
disrupted world. That’s causing a shift in focus. Competitive advantage is no longer
solely about what companies do, it’s about how they do it. Manufacturers are refining
everything, from the way they produce goods to how they engage with customers –
and operations is leading the way.
What the survey says
The challenges facing the sector
are more long-term, more
fundamental, and more strategic
than ever before. Understanding
what customers value is at the top
of the list.
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2nd most challenging
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3rd most challenging
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Manufacturers who can anticipate and
meet changing demand patterns are
better placed to win in their market.
Yet 73% of industrial manufacturing
executives in our survey said that
understanding what customers value
is a top operations challenge for
their company.
Understand
what customing
ers
value
%
14
Industrial manufacturing companies
are having to adapt to change at an
increasing pace. 73% of operations
executives expect the advent of new
competitors to disrupt their business,
compared to 58% across all industries.
New technologies – such as 3D printing
or the Internet of Things – along with
predictive maintenance techniques are
creating radically different opportunities
in manufacturing.
Getting to know you: industrial
manufacturers find it tough to know
what customers value
80%
Q: Which of the following are operations challenges for your company?
I will read out six statements. Please tell me which is first, second, and
third most challenging for your company.
Base: 37 industrial manufacturing respondents
Source: PwC's 2015 Global Operations Survey, October 2015.
Contact
Barry Misthal
Global Industrial Manufacturing Leader
+1 267 330 2146
[email protected]
Operations now extends from its traditional
functions like sourcing and supply chain, to a full
range of customer-focused activities – 70% of
our respondent companies now include sales and
68% marketing within the operations brief, while
73% include customer insights, and 65% new
product development.
Of these, 63% believe that their competitiveness
will be at risk if they aren’t successful, compared
with an overall average of 50%. In industrial
manufacturing these capabilities might range from
new product development to life cycle analysis, to
new processes and technology.
As the scope of operations broadens, the function’s
objectives are shifting from the purely tactical to
the much more strategic: operations leaders at 68%
of our industrial manufacturing survey companies
participate in strategic decisions about products
and services (compared with an overall average
of 49%), and 60% are rewarded according to their
contribution to overall corporate strategy, rather
than solely on team or functional performance.
Collaboration is becoming more important – both
inside the business, and with third parties and
partners outside. The more strategic operations
becomes, the more important it is to work across
functions, bringing in different perspectives
and different skills. That is why 57% say greater
cross-functional collaboration is the single most
important way to achieve business goals.
Operations in these businesses is also moving
beyond continuous improvement to give equal
priority to long-term transformation.
Developing distinctive capabilities
Capabilities are the how of corporate strategy.
They take much longer to develop than products
or services, and that makes them a more resilient
source of competitive advantage. Many industrial
manufacturing operations executives already
recognise this; 92% are exploring how to achieve
the differentiating capabilities needed to achieve
genuine and sustainable competitive advantage.
The value of collaboration
Innovation can emerge from anywhere, including
collaborating with customers on new product
development. Customers increasingly expect
the right to influence product design, and that
products will be available where and when they
want them. Digital is one of the most effective
ways to engage, and it’s encouraging that 95%
of operations executives already use technology
to facilitate collaboration.
As the scope of operations broadens, the function’s objectives are shifting
from the purely tactical to the much more strategic.
Next steps, next questions
It’s an exciting time for operations leaders, who
can drive their companies’ destiny like never
before. In our view, the more strategic companies
are more likely to focus their efforts on building
a few differentiating capabilities that drive
competitive advantage. At the same time they
work to de-emphasise other activities. When
thinking about how your company will transform
operations to meet the needs of your customers,
consider these questions:
• Given your company’s way to play, what
capabilities does the company need to win in its
chosen markets?
• What does your assessment say about the
operations capabilities you already have?
How are the capabilities your company
needs for distinction managed now? Will
your management team and your day-to-day
operations teams agree that these are the
right priorities?
• Do financial parameters, such as cost, working
capital, and capital expenditures, work to
support the operational capabilities your
company needs to win? What may need to
change for how resources are allocated to
these priorities?
View all the survey data at www.pwc.com/reimagineops
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